Claim Benefits? Then Bank Charges are Unlawful (The truth is that they are lawful)

Did you know that

Section 187 of the Social Security Administration Act 1992There is an Act of Parliament which over-rides banks taking charges from your account if you are in receipt of any of the following benefits.• Income Support • Tax Credits • Child Benefit • Job seekers allowance • Incapacity benefit • Disability living allowance • Attendance Allowance • CSA payments • Other DWP paymentsThese social security benefits are granted to stop hardship and are designed to meet basic day to day needs, and are exempt and are protected under the Social Security Administration Act 1992 sub section 187. from arrestment in terms of section 187 of the Social Security Administration Act 1992 (see Enforcement of Civil Obligations in Scotland, Scottish Executive report, at paragraph 5.245).Section 45 of the Tax Credits Act 2002 Chapter 21 part 1 is an identical provision to the said section 187 of the 1992 Act. This stipulates that the banks can not apply any charges to money received as benefit, and any such charges are unlawful and therefore disallowed.If you have any bank charges and in receipt of these benefits - write to your bank asking for your charges back.

The above post is appearing more and more on forums across the UK so it's time to debunk it .

The first thing I will say that Tom Brennan on here quoted it quite succinctly in a post on LB:I researched this topic some time ago, and my understanding of the application of this section is as follows:

Any assignment of your state benefits or pension is void and unenforceable. That is to say, no person or organisation can collect your state benefits/pension in your place as settlement of a debt (subject to certain exceptions involving state institutions). As a result, you could not instruct the DWP to pay your benefits to a 3rd party, and a 3rd party could not enforce any agreement that gives your state benefits to them. This was introduced at the end of the 1800s to stop the first state benefits (such as war pensions) being taken by unscrupulous 3rd parties, which happened an awful lot.

However, under current banking law, once your benefits (or indeed, any other income) is paid into your account, it is no longer classified as your benefits; it becomes part of a generic monetary debt owed to you (if your account is in credit) or owed by you (if your account is in debit). Think of your benefits as a glass of water, and your bank account as a water tank. S.187 effectively strikes down any agreement that stops your weekly glass of water going into your water tank and/or going to somebody else's water tank. That water is for you and you alone. However, once you have put it into your water tank, it is just becomes part of the whole collection of water that is in there, and can no longer be protected. The practical reason is that you couldn't identify which of those water molecules (your pennies) that came from your glass (benefits), and which were in there already.

The only way to protect your benefits is to have them paid into a separate account with a separate bank, which avoids any set-off (think of this as the bank linking up any water tanks that you have with them to get the overall amount of water you have stored with them or borrowed from them). A number of banks work with fast transfer payments, so you should be able to move your money from your benefits account with one bank to another account with another bank (such as your house or bills account) within two hours. This is the best way to protect your benefits from everyone and anything.

However, some will say: "hang on, I got my charges back quoting this to the bank".
I suspect that they may well have got bank charges refunded but not because of the above. The very fact that it is money taken from their benefits may come into the issue of "The Lending Code" section 9 which relates to financial hardship.
I would add as well, that a manager's discretion may come into the mix as well.

Anyone who wants to challenge ALL their bank charges back on the above will be sadly disappointed. The reason I post this up again is because it keeps coming up again and again and again and it's not gonna happen.

Last edited by Amethyst; 15th July 2014 at 20:34:PM.

"Family means that no one gets forgotten or left behind"
(quote from David Ogden Stiers)

Re: Claim Benefits? Then Bank Charges are Unlawful (The truth is that they are lawful

In addition to Leclerc's advice, any benefit claimant who is finding their benefits being grabbed by their bank and being left with little to exist on should contact the DWP asap and discuss the matter with them. They can then arrange an alternative payment method, if this is necessary.

I did see something on MSN this morning to spank the UK bank directors who caused the financial crash. I am wondering if they are going to bring back public floggings or hangings for these reckless idiots? The general mood appears to be to ban them from the banking and financial services sector. Banning them from ever stepping inside a boardroom again should go hand in hand with any ban from the industry IMO.

Life is a journey on which we all travel, sometimes together, but never alone.

Re: Claim Benefits? Then Bank Charges are Unlawful (The truth is that they are lawful

It is interesting that the great food of the banks himself has recently stated that you can not rely on quoting BCOBS to get money back and that you must go to court to get it done. I have to say, if this is so certain why has someone with assets not bankrolled such a claim?

Re: Claim Benefits? Then Bank Charges are Unlawful (The truth is that they are lawful

Originally Posted by jon1965

It is interesting that the great food of the banks himself has recently stated that you can not rely on quoting BCOBS to get money back and that you must go to court to get it done. I have to say, if this is so certain why has someone with assets not bankrolled such a claim?

Because BCOBS cannot be used, we have had this discussion before on here. BCOBS does not regulate overdrafts because that is the remit for the OFT. I have posted on a thread or even posted a thread on that where clearly BankFodder/Marc Gander is mistaken. He admits so himself on the forum that only one person was successful on the basis that the claimant won by default which means the bank may well have been unaware of litigation behind it. As that judgement was never enforced by that individual we will never know that the OP would have lost if he had followed that advice.
Advising someone to go to court on a wing and a prayer is dangerous and very much come from an ill informed individual who is riding on the back of what was a good forum. BBC News does not even bothering to ask him for quotes on financial services stories anymore which is how little he is now viewed by them.

"Family means that no one gets forgotten or left behind"
(quote from David Ogden Stiers)

Re: Claim Benefits? Then Bank Charges are Unlawful (The truth is that they are lawful

It was an untested piece of legislation, I know someone who had a defence prepared by him using BCOBS just over a year ago and ended up having to settle because the defence was seen to have no merit. The settlement terms were quite good, but that was thanks to Watsons not using the BCOBS defence. This was discussed quite extensively on another forum and I have the full defence, etc. on file.

Re: Claim Benefits? Then Bank Charges are Unlawful (The truth is that they are lawful

Originally Posted by bluebottle

In addition to Leclerc's advice, any benefit claimant who is finding their benefits being grabbed by their bank and being left with little to exist on should contact the DWP asap and discuss the matter with them. They can then arrange an alternative payment method, if this is necessary.

I did see something on MSN this morning to spank the UK bank directors who caused the financial crash. I am wondering if they are going to bring back public floggings or hangings for these reckless idiots? The general mood appears to be to ban them from the banking and financial services sector. Banning them from ever stepping inside a boardroom again should go hand in hand with any ban from the industry IMO.

I know this is an old post but since when you wrote this it has become more commonly known that most money is basically debt money now and there is more debt in the world than money to pay it back. It is not the fault of the bank clerks (bankers) as much as it is the central banks and nothing has really changed so we are in for worse than what happened in 2008. By several magnitudes. Not that the money will vanish, it wont. Like energy, money just changes form, but for most people it is going to be pretty damn serious.